Optimizing Cross-Border CCS Policy: An Integrated Energy–Carbon–Cost Framework for Source–Host Credit Allocation

Cross-border carbon capture and storage (CCS) is emerging as a regional decarbonisation pathway for industrial economies with concentrated emissions and uneven domestic storage availability. Existing CCS optimisation studies have advanced source–sink matching, route design, ship and pipeline logistics, and infrastructure planning; however, most remain focused on techno-economic cost minimisation and do not explicitly integrate energy penalties, country-level emissions accounting, domestic versus export storage options, or source–host credit allocation across jurisdictions. This study develops a process systems engineering (PSE)-based mixed-integer linear programming (MILP) framework for cross-border CCS network design and policy evaluation. The framework is demonstrated through a hypothetical Japan–Malaysia case study parameterised using literature-derived technical, economic, storage, policy, and carbon-credit assumptions. In the case study, there are two Japanese CO₂ sources, JP-Source 1 and JP-Source 2 as well as two Malaysian offshore storage sinks, MY-Sink 1 and MY-Sink 2. The case study also evaluates export route options, domestic Japan storage alternatives, offshore pipeline sizing, scenario-dependent risk premiums, Malaysia import-cap constraints, country-specific carbon credit values, and alpha-based source–host credit allocation. The model minimises annual system cost while enforcing source balances, capture limits, route capacities, transport losses, storage balances, injection and cumulative storage constraints, energy requirements, carbon penalties, and country-level physical, credited, and net emissions. Simulated scenario results show that domestic Japan storage is cheaper under base assumptions, while Malaysia export becomes competitive when storage fees are reduced and credit support is recognised. Credit allocation affects both national accounting outcomes and system cost when country-specific credit values are used: source-country allocation gives the lowest objective because Japan’s credit value is higher, whereas host-country allocation shifts the accounting benefit to Malaysia. The framework provides a transparent basis for evaluating cross-border CCS cooperation, infrastructure competitiveness, and credit-sharing policy design.